- (Topic 5)
(Samuel works for a major company offering a GRRSP and a group TFSA.
How do Samuel??s contributions to the GRRSP differ from his contributions to the group TFSA?)

1. A. Samuel??s contributions to the GRRSP are made with money already taxed, while TFSA contributions are deductible.
2. B. Samuel??s contributions to the group TFSA are made with money already taxed, while GRRSP contributions are deductible.
3. C. GRRSP contributions are subject to an annual limit; group TFSA contributions are not.
4. D. TFSA contributions are deducted from pay each period; GRRSP contributions are made once a year.

Correct Answer: B
Group TFSA contributionsare made withafter-tax moneyand grow tax-free.GRRSP contributionsreduce taxable income immediately because they aretax-deductible. Exact Extract:
"Contributions to a TFSA are not deductible and must be made with after-tax dollars. RRSP
(andGRRSP) contributions are tax-deductible, reducing taxable income."
(Reference:Segfunds-E313-2020-12-7ED, Chapter 1.3.11 Group Plans)

- (Topic 3)
Dominic suffers a heart attack on October 1 and dies a little over a month later, on November 7. At the time of his death, he owned a $150,000 critical illness (CI) insurance policy, purchased 10 years earlier. Dominic never failed to pay the $100 monthly premium.
When he died, the insurer had not yet issued the benefit payment. How will the CI benefit be treated?

1. A. It will not be paid.
2. B. It will be paid to Dominic??s next of kin.
3. C. It will be payable to Dominic??s estate.
4. D. Dominic??s estate will receive a return of premiums.

Correct Answer: A
Critical illness (CI) insurance pays a lump-sum benefit upon diagnosis of a covered illness, but typically requires the insured tosurvive for a specified period(often 30 days) following the diagnosis. Although Dominic suffered a heart attack, he did not die immediately. However, he passed away within the 30-day survival period following the heart attack, which is a common requirement in CI policies for benefit payment. Since the survival requirement was not met, the benefit will not be paid. Generally, in such cases, the insurer may refund premiums if specified in the policy, but the CI benefit itself would not be payable.

- (Topic 4)
Jean, who is in business, would like to understand why his segregated funds, which resemble mutual funds, allow this type of asset to be sheltered from creditors. How should Patrice, his financial security advisor, answer?

1. A. The reason is that segregated funds are offered through an annuity policy, and by law, annuities offer a certain measure of protection if the beneficiary is the legal spouse or the policyholder??s ascendant or descendant, or an irrevocable beneficiary
2. B. The reason is that segregated funds are governed by the AMF??s Guideline on Individual Variable Insurance Contracts Relating to Segregated Funds, which states that these products are exempt from seizure
3. C. The reason is that anything offered by a life insurer can be exempt from seizure if a beneficiary is designated, except for contributions in the last year
4. D. The reason is that mutual funds do not offer a guarantee and it??s the guarantee offered by segregated funds, which ensures it is an insurance contract and which therefore allows funds to be free from creditors

Correct Answer: A
Comprehensive and Detailed In-Depth Explanation: Segregated funds are investment products offered by life insurers, combining insurance and investment features. Under Quebec??s Civil Code (Article 2457), proceeds from life insurance contracts, including annuities, are exempt from seizure if the beneficiary is the policyholder??s spouse, ascendant, descendant, or an irrevocable beneficiary. Segregated funds qualify for this protection because they are structured as annuity contracts, distinguishing them from mutual funds. Option A correctly identifies this legal protection tied to beneficiary designation. Option B misattributes the protection to the AMF Guideline, which regulates segregated funds but does not grant seizure exemption—that stems from the Civil Code. Option C overgeneralizes, as not all insurance products are exempt (e.g., recent contributions may be contested under Article 2459). Option D focuses on the guarantee, which is a feature of segregated funds, but the creditor protection hinges on the insurance contract status and beneficiary rules, not the guarantee alone. The Ethics manual requires advisors to explain legal protections accurately.
References: Civil Code of Quebec, Articles 2457–2459; Ethics and Professional Practice
(Civil Law) Manual, Section on Segregated Funds and Creditor Protection.
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- (Topic 4)
Ad??le retired a few months ago. She sold some of her assets and would like to use the funds to take out a term annuity to increase her retirement income. Ad??le brings a $300,000 cheque to Germain, her financial security advisor, and wants to begin receiving lifetime guaranteedbenefits in one month with the right to use capital in the event of an emergency. When Germain tells her about alienating capital, the capitalization phase, and the payment phase, Ad??le becomes confused and asks for clearer explanations. What can Germain say to help Ad??le understand?

1. A. If her capital is alienated now, i.e., if ownership of the money is transferred to the insurer, the insurer will be able to guarantee all the conditions of the annuit
2. B. Since the first benefit will be paid in a month, the contract will automatically be in the payment phase
3. C. The alienation will allow Ad??le to keep ownership of the capital and use it in the event of an emergenc
4. D. The capitalization phase will enable the insurer to grow the capital before paying the annuity
5. E. The contract will be a deferred annuity contract for one month and will be in the accumulation phase until the insurer takes possession of the $300,000 in capita
6. F. For benefits to be paid, the contract will enter the payment phase
7. G. To grow the transferred capital and pay the annuities as planned, the contract will be an immediate annuity contract in the capitalization phase until the annuity??s guaranteed phase expire
8. H. The contract will then enter the payment phase

Correct Answer: A
Comprehensive and Detailed In-Depth Explanation: Ad??le seeks an immediate term annuity with payments starting in one month, funded by a lump sum. In annuity contracts (Civil Code, Article 2368), ??alienation?? means transferring capital ownership to the insurer, which then guarantees payments. Option A explains this: once Ad??le??s $300,000 is alienated, the insurer assumes control, and with payments starting in one month, it??s in the payment phase (no significant accumulation). This aligns with an immediate annuity per the LLQP. Option B is incorrect—alienation means Ad??le loses ownership, barring emergency access. Option C??s ??deferred annuity?? contradicts the one-month start. Option D misuses ??capitalization phase?? (growth period) for an immediate annuity already paying out. The Ethics manual requires advisors like Germain to clarify terms simply and accurately.
References: Civil Code of Quebec, Article 2368; LLQP Module on Annuities; Ethics and
Professional Practice (Civil Law) Manual, Section on Client Education.
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- (Topic 2)
Marcel is 16 years old and attends a boarding school in Ontario. He is a resident of New Brunswick and lives there with his parents in the summer months. After a recent family death, his father has been reviewing the family's life insurance coverage and suggests that Marcel apply for a policy on himself. He tells his son that he will pay the premium while he remains a student. Since Marcel won't be home for some time, his father asks him to meet with an agent in Ontario to apply for coverage. Which one of the following statements is correct regarding Marcel's application?

1. A. Marcel can be both the owner and insured of the policy.
2. B. Marcel must sign the application in New Brunswick, where he is a resident.
3. C. At least one of his parents must witness his signature as policy owner.
4. D. At least one of his parents must be the owner of the policy.

Correct Answer: A
Comprehensive and Detailed in Depth Explanation with Exact Extract from Documents and Guides:
Under Canadian common law and insurance principles, a minor who has reached the age of 16 can enter into an insurance contract on their own life, provided they have the capacity to understand the contract. Marcel, at 16, is legally able to apply for and own a life insurance policy where he is also the insured. TheIFSE Ethics and Professional Practice Course (Common Law)emphasizes that the policy owner must have an insurable interest in the insured, which Marcel inherently has in himself. There is no requirement for the application to be signed in his province of residence (New Brunswick), nor is there a need for a parent to witness his signature or act as the policy owner, as long as Marcel consents and understands the contract. His father paying the premiums does not affect ownership, as premium payments can be made by a third party without transferring ownership. Option A is correct because Marcel can legally be both the owner and the insured.
References:
IFSE Ethics and Professional Practice Course (Common Law), Module 2: Insurance Contracts, Section on "Capacity to Contract" and "Insurable Interest."